Health Care Driving the Budget Crisis

As leaders in Congress wrestle with health insurance reform, the consequences of millions of uninsured Floridians loom threateningly over the 2010 Florida legislative session, which begins Tuesday.

The state faces a $3 billion budget shortfall, and Medicaid is one of the main reasons for it. More than one-quarter of the cash-strapped $66 billion state budget now goes to Medicaid, and the cost is rising so fast that within a decade more than one-third of the budget will go to cover medical care for the poor and disabled, according to a House analysis.

The immediate problem facing lawmakers is the economic recession has swelled the Medicaid rolls to 2.7 million Floridians - creating more than an $800 million deficit that will have to be made up in the new budget.

Additionally, nearly another $1 billion in federal Medicaid funding remains in doubt next year, awaiting congressional action to extend the extra money through June 2011.

"It is a huge issue for our state that we have to come to terms with," said Sen. J.D. Alexander, R-Lake Wales, the Senate's budget chairman.

"It's a very, very important program, and it's very critical for many of our citizens for their health and lives. But with that said, it's very hard to see how we can manage our budget going forward if we don't get more creative."

Yet, at the same time costs in the $18 billion Medicaid program are skyrocketing, critics say Florida's health-care services are grossly inadequate for some of the state's most vulnerable citizens.

A new report from the nonprofit Pew Center on the States flunked Florida on its Medicaid dental care for children. Less than a quarter of the Medicaid-eligible children received care - well short of the 38 percent national average. The study cited a shortage of 750 dentists to serve the children - one of the highest deficits in the nation.

Critics say one of the reasons for the lack of dental care and other Medicaid services is the state's woefully low reimbursement rates for physicians. Those fees are now the subject of a class-action lawsuit in federal court in Miami.

Karen Woodall, a longtime social services advocate in Tallahassee, called discussion about cuts in the Medicaid program "frustrating."

She said the argument that Medicaid was rapidly expanding has to be explained in the context that the federal government is paying more than 67 percent of cost - or every dollar the state spends on health care for the poor draws $2.09 in federal money. Before the stimulus funding, the federal government paid about 55 percent of the cost.

"In terms of the lives it impacts, it's huge. To discuss cutting it is really counterproductive, and it's frustrating that it's always the first place that they go," Woodall said.

Nonetheless, lawmakers could cut back some of the services this spring. Most of the debate will focus on the so-called "optional" services, which the state provides but are not required by federal Medicaid regulations.

One of the largest optional services is prescription drugs, something that lawmakers have never seriously talked about eliminating.

But they have debated the need for other services, including chiropractic care, dentures, hearing aids, hospice care for the dying, mental health services and kidney dialysis.

"While they're optional. They're not fluff," Woodall said. "People's lives are affected if you cut back on a kidney dialysis program."

House and Senate leaders say those real-life impacts will given serious consideration in the Medicaid debate.

Senate President Jeff Atwater, R-North Palm Beach, said while lawmakers are concerned about the cost of Medicaid, they are also looking for ways to improve the services.

"This thing sees no sign of slowing down in its growth. I have to find a way to address that because there is a fiscal problem as well," he said. "But I will tell you though that there has been a human issue here I think that is important to me to finding the right answer."

Aside from the potential service cuts, the more significant Medicaid debate this spring will be over whether the state should begin expanding its Medicaid pilot programs. Those now operate in five counties, including Broward and Duval.

Expanding them to the rest of Florida's counties would essentially mean moving more Medicaid clients from a traditional fee-for-service system into managed care run by HMOs, which proponents argue can save money.

The Agency for Health Care Administration, which oversees Florida's Medicaid program, has prepared a plan to transfer 375,000 Medicaid clients into HMOs in 19 counties, including 13,500 in Polk County and 4,200 in Manatee County.

It would reduce Medicaid costs by a projected $58 million and result in savings of $22.5 million in state funding.

The Medicaid pilot projects have received generally positive reviews, although not all the data has been analyzed.

Atwater said expanding the pilot projects, which would require federal approval, appears to be a "serious" option.

"It may not have turned the clock back in dollars spent, at least it dealt with some of the escalating costs we had seen," Atwater said.

He said one of the attractions of the pilot programs is that not only were they aimed at curbing costs, but they could also be used to change patient behavior and direct them to more preventive type of treatment.

Woodall said there are still questions about the quality of care provided by using more HMOs. She noted that data on how the pilot Medicaid recipients interacted with their providers has yet to be provided by the state. She also cited a study from the hospitals showing more managed care patients ended up in costly emergency rooms as opposed to non-HMO patients in the pilot areas.